Agile EVM: Earned Value Management the Agile Way

The Product Owner agreed to drop the story points needed to bring the metrics into balance. The project moved forward and was completed successfully. The early warning that AgileEVM afforded us proved extremely helpful to the team and to the Product Owner.

On a second recent project, this one a web based payroll system, we had been calculating the AgileEVM metrics from the first sprint as the team got started. By the end of the third sprint it became apparent that the team's velocity was stabilizing, and that we again had more story points planned than could be accomplished by the planned release date. With this information, the team and Product Owner were able to negotiate an extension to the release date, allowing the team the appropriate time to develop those features deemed most critical to the first release.

The Case for EVM in Software Development EVM is a widely recognized branch of Project Management. It is the subject of in-depth study by the College of Performance Management and is included as a standard technique in the "Guide to the Project Management Body of Knowledge (PMBOK)" published periodically by the Project Management Institute [2]. EVM integrates the areas of technical performance, schedule, and actual cost to provide metrics for work actually accomplished. By comparing the earned value (EV) with the planned value (PV), the efficiency of accomplishing work can be accurately measured.

In a 1998 article for Crosstalk magazine titled "Earned Value Management–A Powerful Tool For Software Projects," Quentin Fleming and Joel Koppelman (authors of the seminal work Earned Value Project Management) wrote "The single most important benefit of employing earned value (management) is the cost efficiency readings it provides." [3]Cost efficiency readings measure how effectively the project is using funds; a key component to measuring expected return on investment for a project or product.

The value of forecasting final costs early cannot be over estimated. In the same article, the authors state that " Earned value can provide any project manager with an early warning tool that sends out a signal from as early as the 15 percent completion point on a project. This signal allows the project manager to forecast the final required funds needed to finish the job within a narrow range of values. If the final forecasted results are unacceptable to management, steps can be taken early to alter the final requirements."

Implementing AgileEVM There is no question that there is still some push back on using EVM with Agile Software projects. Detractors have claimed EVM should not be used on Agile projects due partly to the belief that for EVM to be applied, the entire project scope must be planned in advance, and in detail using a Work Break Down structure. Another belief is that the EVM technique is too "heavy weight" for Agile projects.

For example, the U.S. Department of Defense has identified 32 standards for EVM must be met on certain sized contracts. Try applying that to an Agile software development project! Other objections center on the fact that traditional EVM calculations include estimates of partially completed work. This is in direct contrast to the Agile definition of work as "done or not done." In practice, none of these objections have proven to be obstacles to the effective implementation of AgileEVM.

AgileEVM has proven accurate at integrating EVM metrics into Agile projects. Our experience in applying these techniques center on projects using the Scrum framework; however we believe that these techniques can be equally applied to other Agile projects as well. Some characteristics of AgileEVM are that:

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